TREASURIES-Yields at 2-week highs on U.S. job recovery hopes

Reuters Staff

2 Min Read

TOKYO, March 8 (Reuters) - U.S. Treasuries were soft on Friday, with the benchmark 10-year on the verge of rising above two percent for the first time in almost two weeks, helped by hopes of further recovery in the U.S. labour market.

* The ten-year note yield stood at 1.997 percent , flat from late U.S. levels but up about 15 basis points on the week after four straight days of rising, helped by positive U.S. employment data, a key objective of the Federal Reserve’s stimulus policy.

* Data showed on Thursday the number of Americans filing new claims for unemployment benefits fell to a seasonally adjusted 340,000 last week, below the 355,000 median of analysts polled by Reuters.

* The unexpected fall in weekly jobless claims, which came a day after data from payrolls processor ADP also showed a surprisingly strong hiring by private employers last month, boosted expectations for the extent of jobs growth in February payroll data to be released at 1330 GMT on Friday.

* The median forecast from analysts polled by Reuters was for the U.S. economy to have added 160,000 new jobs last month. The unemployment rate is expected to remain unchanged from January at 7.9 percent.

* The Federal Reserve has said it will keep interest rates near zero until the unemployment rate falls to 6.5 percent, as long as inflation does not threaten to top 2.5 percent.

* But analysts also noted that the top officials at the Federal Reserve, such as Chairman Ben Bernanke and vice chair Janet Yellen, have signalled their willingness to keep stimulus in place for a while, a factor that is likely to limit losses in Treasuries.

* “Unless the job data hugely surprises on the upside, the Treasuries will likely be supported around the current levels,” said Shinichiro Kadota, fixed income strategist at Barclays.

* Planned sales of U.S. government debt next week also added to the bearish tone in Treasuries on Thursday as investors pushed for price concessions ahead of the auctions.